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After the summer holiday lull, offices are filling up once again. But it won’t be long before workers’ tanned and refreshed faces fade, prompting plans for their next trip. When it comes, they are highly likely to encounter some sort of tourist tax along the way. Whether applied to hotel stays, museum visits, or national park entries, paying extra for the privilege of being a tourist is becoming more common.
Many destinations, from Ibiza to Bhutan, have long imposed visitor levies, but governments across the world are now warming to them. Venice and Bali began charging entry fees this year. Greece introduced a “climate crisis resilience fee” in January as part of a wider crackdown on excessive tourism. Edinburgh started a consultation this month to implement a “transient visitor levy”, and last week New Zealand announced a near tripling of its tax from October 1.
For travellers still reeling from high post-pandemic inflation in airfares and accommodation, this may seem unfair. After all, tourism props up local economies. The industry employs about 330mn people worldwide, and accounts for just under 10 per cent of the global economy. Travel also supports education and cultural exchange, not to mention stress relief. Why make it costlier?
There is a reasonable argument in favour of tourist taxes in some places. Travellers bring litter, noise and congestion. High footfall in peak seasons can trample ancient sites and disrupt precious ecosystems. Taxes charge travellers for these negative impacts, and can regulate demand. This summer’s backlash — which saw Catalans squirting water pistols at dining tourists and Athenians spray-painting city walls with anti-tourist graffiti — highlighted that not all locals feel they benefit from tourism.
Indeed, the revenues from tourist taxes can make high-volume travel more sustainable. Arts, culture and infrastructure maintenance budgets, which are often the first to be scrapped in a crunch, can be replenished. That benefits locals and tourists. The “eco tax” on Spain’s Balearic Islands is used for conservation, and to improve walking and cycling routes.
Even small levies can provide valuable income streams for cash-strapped local areas. Officials in Edinburgh reckon a 5 per cent tax on the cost of a hotel room per night could raise £50mn a year. Destinations that have a particularly unique culture, history or geography, like Venice, will find that tourists are undeterred by taxes, within certain limits. At least they can generate revenue to alleviate the pressures of overcrowding. One study of a tax in Puglia in Italy even showed that telling visitors that proceeds would be used to boost sustainability actually raised their willingness to pay.
For less distinct destinations, even slight taxes risk scaring tourists altogether. Elsewhere, for instance, in small island nations that are particularly reliant on tourists, calibration is important to maintain price competitiveness. One estimate suggests a 10 per cent increase to tourist taxes in the Maldives could reduce demand by 5.4 per cent. Cities also need to be wary that the recent surge of tourists may simply reflect a post-pandemic bounce back, and not a new normal. In that case, higher taxes could impact tourist numbers more than they expect.
Either way, allowing local areas the option to levy tourists seems sensible. When they are applied, as with all taxes, fairness and simplicity are important. For cities, charges levied by hotels are most common, and ought to extend to private rental companies, like Airbnb, to prevent avoidance. Flat rates are easier to understand, too.
With the global middle class rising, beaches, mountains and cobbled old quarters will only get busier. Despite their grumbling, local residents will struggle to stem the flow. But by using tourist taxes and their revenues wisely, travel can work a bit better for everyone.
